Darden Restaurants (NYSE:DRI) Announces Quarterly Earnings Results, Beats Estimates By $0.03 EPS

Key Points

• Darden Restaurants beat earnings expectations for the quarter, reporting EPS of $3.66 versus the $3.63 consensus estimate. That was also well above the $2.98 EPS it posted in the same quarter last year.
• Revenue grew 13.7% year over year, and the company posted a net margin of 8.66% with return on equity of 53.54%. However, later commentary noted revenue still missed Wall Street expectations.
• Management signaled confidence in future cash flow by increasing the quarterly dividend and authorizing a new $1.5 billion share repurchase program. Analysts remain largely constructive, with a consensus rating of “Moderate Buy.”

Darden Restaurants (NYSE:DRI - Get Free Report) released its quarterly earnings data on Thursday. The restaurant operator reported $3.66 earnings per share for the quarter, topping the consensus estimate of $3.63 by $0.03, Briefing.com reports. Darden Restaurants had a net margin of 8.66% and a return on equity of 53.54%. The firm's revenue was up 13.7% compared to the same quarter last year. During the same quarter last year, the business posted $2.98 EPS.

Darden Restaurants Price Performance

NYSE:DRI opened at $213.96 on Thursday. The stock has a market capitalization of $24.51 billion, a PE ratio of 22.64, a P/E/G ratio of 1.88 and a beta of 0.60. Darden Restaurants has a 1-year low of $169.00 and a 1-year high of $222.56. The firm has a fifty day simple moving average of $201.32 and a 200 day simple moving average of $200.64. The company has a current ratio of 0.39, a quick ratio of 0.25 and a debt-to-equity ratio of 1.02.

More Darden Restaurants News

Here are the key news stories impacting Darden Restaurants this week:

• Positive Sentiment: Darden reported fiscal fourth-quarter adjusted EPS of $3.66, topping expectations, and said comparable sales were better than expected, which supports the stock. Article Title
• Positive Sentiment: The company increased its quarterly dividend and authorized a new $1.5 billion share repurchase program, signaling confidence in cash flow and giving investors more capital return potential. Article Title
• Positive Sentiment: Guggenheim raised its price target on Darden and kept a buy rating, which may be reinforcing investor optimism after earnings. Article Title
• Neutral Sentiment: The board approved bylaw changes aimed at improving shareholder participation, which is a governance update but not a major operating catalyst. Article Title
• Negative Sentiment: Revenue missed Wall Street expectations, and commentary pointed to weaker same-store sales growth at Olive Garden and fine-dining locations, which may limit upside if traffic slows further. Article Title
• Negative Sentiment: Management and analysts flagged margin pressure from beef inflation and continued investment spending, which could weigh on near-term profitability. Article Title

Insiders Place Their Bets

In other news, SVP Lindsay L. Koren sold 300 shares of Darden Restaurants stock in a transaction dated Tuesday, April 7th. The shares were sold at an average price of $194.32, for a total value of $58,296.00. Following the completion of the transaction, the senior vice president owned 1,617 shares of the company's stock, valued at $314,215.44. This trade represents a 15.65% decrease in their position. The sale was disclosed in a legal filing with the SEC, which is available at this link. Also, SVP Douglas J. Milanes sold 3,620 shares of the company's stock in a transaction dated Friday, April 17th. The shares were sold at an average price of $202.16, for a total transaction of $731,819.20. Following the completion of the sale, the senior vice president directly owned 274 shares in the company, valued at approximately $55,391.84. The trade was a 92.96% decrease in their ownership of the stock. The SEC filing for this sale provides additional information. Company insiders own 0.49% of the company's stock.

Institutional Investors Weigh In On Darden Restaurants

Several hedge funds have recently added to or reduced their stakes in the business. First Trust Advisors LP grew its stake in Darden Restaurants by 3.3% in the 2nd quarter. First Trust Advisors LP now owns 80,001 shares of the restaurant operator's stock valued at $17,438,000 after buying an additional 2,553 shares during the last quarter. Brown Advisory Inc. bought a new stake in shares of Darden Restaurants during the second quarter worth approximately $200,000. Cresset Asset Management LLC boosted its holdings in shares of Darden Restaurants by 3.2% during the second quarter. Cresset Asset Management LLC now owns 2,424 shares of the restaurant operator's stock worth $529,000 after acquiring an additional 76 shares during the period. Cerity Partners LLC grew its position in shares of Darden Restaurants by 15.7% in the second quarter. Cerity Partners LLC now owns 19,045 shares of the restaurant operator's stock valued at $4,151,000 after purchasing an additional 2,581 shares during the last quarter. Finally, Daiwa Securities Group Inc. grew its position in shares of Darden Restaurants by 5.9% in the second quarter. Daiwa Securities Group Inc. now owns 18,183 shares of the restaurant operator's stock valued at $3,964,000 after purchasing an additional 1,012 shares during the last quarter. Institutional investors and hedge funds own 93.64% of the company's stock.

Analyst Upgrades and Downgrades

DRI has been the topic of a number of recent analyst reports. Evercore cut shares of Darden Restaurants from an "outperform" rating to an "in-line" rating and set a $230.00 price target on the stock. in a research report on Tuesday. Oppenheimer reaffirmed an "outperform" rating and set a $235.00 price objective on shares of Darden Restaurants in a research note on Thursday, June 18th. Sanford C. Bernstein reiterated an "outperform" rating on shares of Darden Restaurants in a report on Friday, March 13th. KeyCorp boosted their target price on Darden Restaurants from $226.00 to $228.00 and gave the company an "overweight" rating in a research note on Wednesday, May 27th. Finally, Wells Fargo & Company raised their price target on Darden Restaurants from $200.00 to $210.00 and gave the stock an "equal weight" rating in a research report on Friday, March 20th. Seventeen research analysts have rated the stock with a Buy rating and nine have given a Hold rating to the stock. According to data from MarketBeat.com, the stock currently has a consensus rating of "Moderate Buy" and a consensus target price of $227.46.

About Darden Restaurants

Darden Restaurants, Inc is a multi-brand, full-service restaurant company headquartered in Orlando, Florida. The company owns and operates a portfolio of casual and fine-dining concepts that together serve millions of guests through company-owned and franchised locations. Its well-known brands include Olive Garden and LongHorn Steakhouse, alongside other dining concepts that span Italian, American, steakhouse and upscale casual formats.

Darden's restaurants provide a range of guest-facing services including dine-in, takeout, delivery and catering, and feature menus tailored to each brand's positioning—Italian-American fare at Olive Garden, steaks and grilled items at LongHorn, and more premium steakhouse and chef-driven offerings at its upscale concepts.

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